<<

. 12
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>>

behavior.67
But Watt-Cloutier™s framing of the petition68 calls that view into question. If the
people ¬ling the petition recognize its limited capacity to formally compel action,
can it be viewed as inviting dialogue? Can a “confrontational” mechanism help to
foster a much-needed public conversation about these issues? Even if the Commis-
sion refuses to reconsider its negative response, has the petition still succeeded in
some manner by initiating discourse about climate change and human rights? This
ambiguity about how to categorize this petition opens the possibility of bridging
dialogue and confrontation.

http://www.itk.ca/5000-year-heritage/cultural-origin.php.
65

Inuit Petition, supra note 12.
66

This notion of confrontation is at the core of the traditional litigation model. For an analysis of the
67

growing possibilities for intermingling between traditional litigation and alternative dispute resolution,
see Vance K. Opperman, The Pros and Cons of ADR, Including ADR/Litigation Hybrids, 1 Sedona
Conf. J. 79 (2000).
See Presentation by Sheila Watt-Cloutier, supra note 1.
68
The Inuit Petition as a Bridge? 289


Together, these two dualisms of legal approaches suggest that a reframing of the
petitioning process opens possibilities for progress on indigenous peoples™ rights. The
petition and Watt-Cloutier™s approach to it attempt to transform an international
human rights process created by nation-states into a vehicle for articulating and
protecting traditional values on an international stage. As this bridging begins to re-
narrate69 what accessing the international legal system means, it provides a potential
mechanism for not only addressing particular problems, but also engaging cultural-
legal myths that have served to devastate indigenous peoples.70 The goal of such a
dialogue may not be Hegelian synthesis, but rather an opening of multiple pathways
for “moving forward.”


3. CONCLUDING REFLECTIONS: PETITIONS AND PROGRESS?

The geography of the petition and the dynamics it embodies present a fundamental
question: where do these potential bridges leave an analysis of the Inuit petition™s
capacity to contribute to progress regarding indigenous peoples™ rights in general
and harms from climate change in particular? This thought piece concludes by
exploring potential answers to this question in terms of both legitimacy and value.
In so doing, it suggests some of the conceptual and legal creativity needed to move
beyond current “ often con¬ning “ dialectics.
The nation-state system, international institutions, and the individually oriented
human rights problems run into serious legitimacy issues in the context of indigenous
peoples. Petitions like the one the Inuit ¬led do not solve those problems, but they
engage them constructively. The Inuit themselves, not the outside lawyers, ¬led
the petition. Watt-Cloutier™s description of the petition challenges the conventional
characterization of it and opens possibilities in the process of doing so. This petition
cannot force the United States to change its behavior directly but puts pressure on
it to do so, or at the very least to enter a dialogue about its choices.
Conceiving of the petition as part of a narrative and as initiating a dialogue leads
to the issue of value. Often, in the United States™ conventional confrontational
lawyering model, success gets equated with courtroom wins. But a “win” in the
context of the Inuit petition is a much more nuanced issue. Is it a turnaround in the
Commission™s stance that allows for a positive ruling on the petition? Is it the hearing
that took place on climate change and human rights? Is it a change in U.S. policy?
Is it a new, and much-needed, dialogue about climate change and/or indigenous
peoples™ rights that is arguably happening as a result of the petition?

Narratives serve as a powerful tool for exposing problems of subordination. See Richard Delgado,
69

Storytelling for Oppositionists and Others: A Plea for Narrative, 87 Mich. L. Rev. 2411 (1988); Stephanie
Weinstein & Arthur Wolfson, Toward a Due Process of Narrative: Before You Lock My Love Away,
Please Let Me Testify, 11 Roger Williams U. L. Rev. 511 (2006); Matthew L.M. Fletcher, Note,
Listen, 3 Mich. J. Race & L. 523 (1998).
For an analysis of those myths, see Razack, supra note 51. For a critical analysis of the international legal
70

system, see Balakrishnan Rajagopal, International Law from Below: Development, Social
Movements and Third World Resistance (2003).
Hari M. Osofsky
290


In an ideal scenario, the United States “listens” and changes its behavior dra-
matically, something that now is happening with respect to federal climate policy
through the change in presidential administration. But even short of that, many
positive possibilities exist through the bridges that petitions like this one may be able
to build. The petition generated publicity that helped to raise awareness about the
way in which climate change is impacting the Inuit and about international human
rights tribunals as appropriate institutions for addressing crosscutting problems.71
A statement from the Inter-American Commission on climate change and human
rights could be used as persuasive authority in other pending actions addressing
climate change and/or environmental rights issues.72 In its various formal and infor-
mal interactions with governments and civil society, the petition becomes a “port of
entry”73 for making progress on these issues.74
A ¬nal excerpt from the remarks of Watt-Cloutier situates the petition and the
importance of reframing our conversation about climate change.

I have attended three COPs. People rush from meeting to meeting arguing about all
sorts of narrow technical points. The bigger picture, the cultural picture, the human
picture is being lost. Climate change is not about bureaucrats scurrying around. It
is about families, parents, children, and the lives we lead in our communities in

A Westlaw search in all news on Nov. 11, 2006, reveals twenty-¬ve news articles in the preceding year
71

that contain the words “Inuit” and “Inter-American.”
The use of international and foreign decisions as persuasive authority in Constitutional interpretation
72

has created controversy in the United States, see Agora: The United States Constitution and Interna-
tional Law, 98 Am. J. Int™l L. 42 (2004), but judicial dialogue “ both formal and informal “ only
seems to be increasing, Anne-Marie Slaughter, A Global Community of Courts, 44 Harv. Int™l L.J.
191 (2003); Anne-Marie Slaughter, Judicial Globalization, 40 Va. J. Int™l L. 1103 (2000); Melissa
A. Waters, Mediating Norms and Identity: The Role of Transnational Judicial Dialogue in Creating
and Enforcing International Law, 93 Geo. L.J. 487, 490“97 (2005); see also Rex D. Glensy, Which
Countries Count? Lawrence v. Texas and the Selection of Foreign Persuasive Authority, 45 Va. J. Int™l
L. 357 (2005); Joan L. Larsen, Importing Constitutional Norms from a “Wider Civilization”: Lawrence
and the Rehnquist Court™s Use of Foreign and International Law in Domestic Constitutional Analysis,
65 Ohio St. L.J. 1283 (2004).
Judith Resnik used this term to reference the multiple ways in which “foreign” norms become
73

domesticated. See Resnik, supra note 27.
The legal pluralist literature has engaged the implications of multiple normative communities sharing
74

social spaces. See, e.g., Robert M. Cover, The Supreme Court 1982 Term Foreword: Nomos and
Narrative, 97 Harv. L. Rev. 4, 9 (1983) (“A legal tradition is hence part and parcel of a complex
normative world. . . . Law may be viewed as a system of tension or a bridge linking a concept of a
reality to an imagined alternative. . . . ); Sally Engle Merry, Legal Pluralism, 22 Law & Soc™y Rev.
869, 870 (1988) (“What is legal pluralism? It is generally de¬ned as a situation in which two or more
legal systems coexist in the same social ¬eld.”). In the international law context, scholars from the
New Haven School have described law as “a process of authoritative decision by which members
of a community clarify and secure their common interests” and argued that “humankind today
lives in a whole hierarchy of interpenetrating communities, from the local to the global.” Harold D.
Lasswell & Myres S. McDougal, Jurisprudence for a Free Society: Studies in Law, Science
and Policy xxi (1992). For other, more recent pluralist analyses in an international law context, see,
for example, Paul Schiff Berman, Global Legal Pluralism, 80 S. Cal. L. Rev. 1155 (2007); Janet
Koven Levit, A Bottom-Up Approach to International Law Making: The Tale of Three Trade Finance
Instruments, 30 Yale J. Int™l L. 125 (2005); William W. Burke-White, International Legal Pluralism,
25 Mich. J. Int™l L. 963 (2004).
The Inuit Petition as a Bridge? 291


the broader environment. We have to regain this perspective if climate change is to
be stopped. Inuit understand these connections because we remain a people of the
land, ice, and snow. This is why, for us, climate change is an issue of our right to
exist as an Indigenous people. How can we stand up for ourselves and help others
do the same?75

Through its many bridges, the Inuit petition provides an important model for how
creative lawyering may help to transform dialogue.


See Presentation by Sheila Watt-Cloutier, supra note 1.
75
13

Bringing Climate Change Claims to the Accountability
Mechanisms of International Financial Institutions

Jennifer Gleason— and David B. Hunter——



INTRODUCTION

Since the early 1990s, pressure from environmental and human rights groups has
pushed international ¬nancial institutions (IFIs) to address the sustainable devel-
opment impacts of the projects they ¬nance. As part of their response, IFIs have
increasingly adopted environmental and social policies that require them, among
other things, to take environmental and social concerns into account. Some of these
policies speci¬cally include impacts associated with climate change. IFIs that have
adopted environmental and social policies to guide their lending include multilateral
development banks (MDBs) such as the World Bank Group, the Asian Develop-
ment Bank, and other regional development banks;1 export credit and insurance
agencies, such as the U.S. Export-Import Bank and the United Kingdom™s Export
Credits Guarantee Department;2 and private commercial banks, such as Citibank,
HSBC, and ABN Amro.3
Concern over the implementation of these policies led the same environmental
and human rights groups to advocate for the establishment of citizen-driven account-
ability mechanisms in the IFIs. Beginning with the creation of the World Bank
Inspection Panel, nine accountability mechanisms have been established. Although
they all differ in terms of their independence and effectiveness, each provides an
opportunity for project-affected people to raise concerns about the compliance of


— Staff Attorney, Environmental Law Alliance Worldwide (ELAW), http://www.elaw.org, 1877 Garden
Ave., Eugene, OR 97403, 541“687-8454, ext. 15, jen@elaw.org.
—— Assistant Professor of Law & Director, Program on International and Comparative Environmental
Law, American University Washington College of Law, 4801 Massachusetts Ave., NW, Washington,
D.C. 20016, 202“274-4415, dhunter@wcl.american.edu.
See, e.g., infra text accompanying note 31 (discussing the environmental and social policies of the
1

World Bank).
See Organisation for Economic Co-operation and Development, Updated Recommendation on Com-
2

mon Approaches on Environment and Export Credits, TD/ECG(2005)3 (Feb. 22, 2005).
See The Equator Principles: A Financial Industry Benchmark for Determining, Assessing and
3

Managing Environmental & Social Risk in Project Financing (headline) (July 2006), available at
http://www.equator-principles.com (last visited Jan. 28, 2007).

292
Bringing Climate Change Claims to the Accountability Mechanisms 293


IFI-¬nanced projects.4 This chapter reviews these mechanisms™ potential use in
¬ling claims relating to climate impacts. Unlike the litigation approaches explored
by most of the chapters in this book, a pure climate change“related claim has yet
to be ¬led with any of the IFI accountability mechanisms. But the mechanisms
have been used to raise concerns about the environmental and social impacts of
oil pipelines and other energy-related projects, and these institutions are frequently
discussed as potential venues for raising climate change claims.
Section 1 of this chapter reviews the IFIs™ impacts on climate change and the
importance of raising the pro¬le of contributions to climate change at these institu-
tions. Sections 2 and 3 introduce the accountability mechanisms by focusing on the
World Bank Inspection Panel and the International Finance Corporation™s (IFC™s)
Compliance Advisor and Ombudsman (CAO). These two are the most widely used
among the IFI accountability mechanisms, and the institutions in which they oper-
ate (i.e., the World Bank and the IFC) are the recognized leaders in international
development. Section 4 provides a brief overview of accountability mechanisms
available at other IFIs.


1. CLIMATE CHANGE AND THE BANKS

Targeting the banks that ¬nance activities resulting in signi¬cant greenhouse gas
emissions is a potentially effective strategy for several reasons. First, IFIs wield sig-
ni¬cant in¬‚uence over what type of projects get funded, particularly in develop-
ing countries, providing $30“$40 billion in ¬nancing every year.5 Moreover, some
¬nancial institutions play a disproportionate role in climate-changing projects. The
World Resources Institute (WRI) reports that “[t]he lending pro¬le of MDBs demon-
strates signi¬cant concentrations of ¬nance in sectors with substantial greenhouse
gas (GHG) emission footprints, including transport, oil and gas, electric power, and
mining.”6 The report calculates that 37 percent of the World Bank™s lending in
2004 went toward these projects, with an investment of $7.6 billion. The same year,
the Inter-American Development Bank invested $730 million (12 percent of its total
lending), and in 2003, the European Bank for Reconstruction and Development
invested $3.3 billion (27 percent of its total lending), in sectors with substantial
impacts on the climate.7
This chapter discusses the potential for climate claims at the IFI™s own accountability mechanisms.
4

Not covered are recent efforts to use domestic courts to compel greater attention to climate impacts in
international project ¬nance. See, e.g., Order Denying Defendants™ Motion for Summary Judgment,
Friends of the Earth, Inc. v. Watson, No. C02“4106 JSW (Aug. 23, 2005) (case brought to require con-
sideration of cumulative climate impacts in the activities ¬nanced by the Overseas Public Investment
Corporation); Friends of the Earth Germany & GermanWatch, Press Brie¬ng, German Government
Sued over Climate Change (June 15, 2004).
Bank Information Center website at http://www.bicusa.org/en/Page.About.aspx (last visited Jan. 26,
5

2007).
Jon Sohn, Smita Nakhooda & Kevin Baumert, Mainstreaming Climate Change Considerations at the
6

Multilateral Development Banks, at 1, box 1, World Resources Institute (July 2005).
Id.
7
Jennifer Gleason and David B. Hunter
294


Closer review of the World Bank shows the in¬‚uence of the banks and their con-
nection to climate change. In addition to its direct ¬nancing, the World Bank is also
an implementing agency of the Global Environment Facility (GEF), which among
other roles, acts as the ¬nancial mechanism for the United Nations Framework
Convention on Climate Change (UNFCCC).8 Through its Carbon Finance Unit,9
the Bank supports the global carbon market by ¬nancing the purchase of emission
credits under the Kyoto Protocol™s Clean Development Mechanism, and in 2008,
the World Bank launched its $6 billion Climate Investment Fund to support the
long-term transition to low-carbon energy systems. The Bank™s in¬‚uence is expanded
further by coordinating other donors; mobilizing bilateral, and increasingly, private-
sector ¬nancing; conducting policy research; and providing technical assistance to
borrowing countries.
Beginning in the 1970s, independent observers began to recognize that the World
Bank and other IFIs supported some of the most environmentally damaging projects
in developing countries. Even assuming good intentions, the size and scale of many
of the projects simply dwarfed the environmental legal and policy infrastructure of
some of the borrowing countries.10 In recent years, for example, the World Bank
has supported the Baku-Tbilisi-Ceyhan pipeline and the Chad-Cameroon pipeline,
which are critical for the future expansion of oil markets and thus likely contributors
of signi¬cant emissions. Despite the obvious climate implications of such projects,
as WRI recently reported, “MDBs do not systematically integrate climate change
concerns into their operations. Over 80 percent of World Bank™s publicly disclosed
lending in the energy sector from 2000 to 2004 did not consider climate change
issues in project appraisals and documentation.”11
A focus on the IFIs is also a sound strategy for environmental activists focused
on climate change: those who bring the money to the table often can impose
environmental and social improvements on projects, if they deem it necessary.
Thus, by greening international ¬nance, environmental advocates can leverage
environmental change at the project level. Moreover, many ¬nancial institutions are

U.N. Framework Convention on Climate Change, Art. 21(3) (1992).
8

“The World Bank Carbon Finance Unit (CFU) uses money contributed by governments and com-
9

panies in OECD countries to purchase project-based greenhouse gas emission reductions in devel-
oping countries and countries with economies in transition. The emission reductions are purchased
through one of the CFU™s carbon funds on behalf of the contributor, and within the framework
of the Kyoto Protocol™s Clean Development Mechanism (CDM) or Joint Implementation (JI).”
http://carbon¬nance.org/Router.cfm?Page=About&ItemID=1.
See, e.g., Robert Goodland, The Environmental Implications of Major Projects in Third World Devel-
10

opment, in Major Projects and the Environment 9“16 (P. Morris ed., Oxford 1987). The Bank™s
poor record in environmental protection, human rights, and poverty alleviation has been well doc-
umented. See Catherine Cau¬eld, Masters of Illusion: The World Bank and the Poverty
of Nations (1997); Bruce Rich, Mortgaging the Earth: The World Bank, Environmental
Impoverishment, and the Crisis of Development (1994); The World Bank: Lending on a
Global Scale (Jo Marie Greisgraber & Bernhard G. Gunter eds., 1996); International Banks
and the Environment: From Growth to Sustainability: An Un¬nished Agenda (Raymond
Mikesell & Lawrence Williams eds., 1992).
Jon Sohn, Smita Nakhooda & Kevin Baumert, supra note 6.
11
Bringing Climate Change Claims to the Accountability Mechanisms 295


concerned about their exposure to climate risk, either in their lending or insurance
portfolios, and this can make them receptive to arguments about climate change.
Recognizing the leverage of IFIs to in¬‚uence projects led activists to push for
accountability mechanisms. They hope these mechanisms can raise the pro¬le of
local community concerns, bringing them directly to the attention of the IFIs™ top
decisionmakers. In so doing, they aim to improve decisionmaking with respect to
speci¬c project, and more generally sensitize the institution to environmental and
social concerns. Accountability mechanisms now exist in six multilateral ¬nancial
institutions and three bilateral ¬nancial institutions.12


2. POTENTIAL CLAIMS TO THE WORLD BANK INSPECTION PANEL

The World Bank Group is comprised of ¬ve separate institutions: the International
Bank for Reconstruction and Development (IBRD), the International Development
Association (IDA), the International Finance Corporation (IFC), the Multilateral
Investment Guarantee Agency (MIGA), and the International Center for the Settle-
ment of Investment Disputes (ICSID). Together the IBRD and the IDA are most
frequently referred to as the “World Bank,” a taxonomy we adopt for this chapter.13
The World Bank Inspection Panel was created by the Executive Directors of the
IBRD and the IDA on September 22, 1993.14 The three-member Panel is authorized
to receive claims about the Bank™s failure to comply with its own policies and pro-
cedures, including its nonenforcement of loan conditions. According to the Panel™s
Operating Procedures, the Panel was “established for the purpose of providing peo-
ple directly and adversely affected by a Bank-¬nanced project with an independent
forum through which they can request the Bank to act in accordance with its own
policies and procedures.”15
The Panel has jurisdiction to review any project ¬nanced by either the IBRD or
IDA. The three-member Panel reports directly to the Board of Executive Directors.16

These are identi¬ed in the chart included infra in Section 4.
12

The primary difference between the IBRD and the IDA is that the IDA provides concessional or low-
13

cost loans to the poorest countries (having per capita annual income below $1025 (in 2005 dollars)).
Nearly half of the eighty-one countries that qualify for IDA lending are in sub-Saharan Africa. The
IBRD provides loans to other developing countries and countries in economic transition at a near-
market rate with longer repayment terms than commercial loans.
IBRD, Resolution No. 93“10; IDA, Resolution No. 93“6 (Sept. 22, 1993).
14

World Bank Inspection Panel, The Inspection Panel for the International Bank for Reconstruction and
15

Development and International Development Association: Operating Procedures, 34 I.L.M. 510, 511
(1995) [hereinafter Inspection Panel Operating Procedures]; see also IBRD, Resolution No. 93“10;
IDA, Resolution No. 93“6 (Sept. 22, 1993).
The twenty-four-member Board of Executive Directors meets several times a week and among other
16

things has the responsibility to approve every loan proposed by the Bank. A Board of Governors,
responsible for broad policy, meets once a year. Voting at the Executive Directors and Board of
Governors is based on ¬nancial shareholding percentages; the United States has the largest voting
share of 17 percent. The G7 comprises approximately 45 percent of the voting shares at the Bank, and
all of the donor countries together comprise a solid majority of the vote. Although most countries share
an executive director, several, including the United States and China, have their own representative
on the Board of Executive Directors. The Board meetings and decisions are not open to the public.
Jennifer Gleason and David B. Hunter
296


It is thus independent of Bank Management (including the President), which is
responsible for promoting or developing Bank projects. To enhance its indepen-
dence, Panel members cannot have served the Bank in any capacity for the two
years preceding their selection and can never work for the Bank again. The Panel™s
Secretariat has ¬ve staff members that support the Panel™s investigations and conduct
outreach on the Panel™s behalf.17 This section explores how claims might be brought
before the World Bank Inspection Panel.


2.1. Filing a Petition
Filing claims to the World Bank Inspection Panel is intended to be simple, with the
goal of making the Panel accessible to even the most disadvantaged communities
or their representatives. Claims can be ¬led by any two or more affected parties in
the borrower™s territory.18 Affected parties can ¬le through a local representative, but
nonlocal representatives are allowed only in “exceptional cases” where “appropriate
representation is not locally available.”19 Claims must be in writing and must explain
how the affected parties™ interests have been, or are likely to be, affected by “a failure of
the Bank to follow its operational policies and procedures with respect to the design,
appraisal and/or implementation” of a project.20 The claimants must provide evi-
dence that they gave Bank staff a reasonable opportunity to respond to the allegations.
Upon receiving a complete request for inspection,21 the Panel registers the claim
and forwards a copy to Bank Management, which has twenty-one days to respond.22
The Panel subsequently has twenty-one days to review Management™s response and
to make a recommendation to the Executive Directors regarding whether the claim
warrants a full investigation.23
The Executive Directors have the exclusive authority to authorize or deny a full
investigation. Although this initially politicized the Panel process, since changes
made in 1999, the Board has supported every Panel recommendation for an investi-
gation.24 Once an investigation is authorized, the Panel enjoys broad investigatory
powers, including access to all Bank staff, documents, and the project site. After the
investigation, the Panel issues a report evaluating the Bank™s compliance with its

For more information, see the Inspection Panel website, available at http://www.worldbank.org/
17

inspectionpanel (last visited Aug. 15, 2006).
Inspection Panel Operating Procedures, supra note 15.
18

Id. at para 4. The Bank™s Board of Executive Directors and, in some circumstances, an individual
19

Executive Director, are also eligible to ¬le a claim.
Id. at paras. 4 & 11.
20

Several types of complaints are explicitly beyond the Panel™s jurisdiction, including complaints
21

(i) addressing actions that are the responsibility of parties other than the Bank, (ii) relating to procure-
ment decisions, (iii) ¬led after a loan™s closing date or after 95 percent of the loan has been disbursed,
or (iv) regarding matters already heard by the Panel unless justi¬ed by new evidence.
Inspection Panel Operating Procedures, supra note 15, at 522.
22

Id.
23

See World Bank: Conclusions of the Second Review of the World Bank Inspection Panel, 39 I.L.M. 249,
24

250 (2000).
Bringing Climate Change Claims to the Accountability Mechanisms 297


policies. Within six weeks, Management must submit to the Executive Directors a
report and recommendations in response to the Panel™s ¬ndings. The Panel™s report,
Management™s recommendations, and the Board™s decision are released publicly
two weeks after Board consideration.25
By the beginning of 2007, the Inspection Panel had received forty-three formal
requests for inspection and had registered thirty-eight of them.26 The Panel has
recommended an investigation in twenty-one claims, and the Board has approved
investigations in seventeen of those.27
Only one claim “ relating to the Chad-Cameroon oil pipeline “ has explicitly
raised climate change impacts. In that claim, local communities affected by the
proposed pipeline raised concerns primarily about local impacts on their forests and
agricultural lands. Among the alleged insuf¬ciencies in the environmental assess-
ment in that claim, however, was a failure to assess the “impact of the combustion
of the oil in the project on climate change.”28 In response, Management asserted
that it had adequately assessed the pipeline™s direct emissions in accordance with its
policies. The Panel ultimately agreed and found further that contribution from the
pipeline would be a “tiny 0.15%” of annual global greenhouse emissions.29 Climate
issues were a small part of the overall claim and did not receive signi¬cant atten-
tion from either the Panel or the civil society advocates monitoring the project. The
Chad-Cameroon experience con¬rms that climate-related concerns can be reviewed
by the Panel, but the unsatisfactory results suggest that future claims need to provide
more detailed factual and policy-based arguments for raising climate concerns.
Other Inspection Panel claims have raised issues that indirectly have signi¬cant
rami¬cations for climate change. For example, in a claim regarding the West African
natural gas pipeline (WAGP) in Nigeria,30 twelve communities challenged the
Bank™s assessment and approval of the project on several grounds, including the
Bank™s failure to require that waste gas associated with Nigeria™s oil production be
captured to supply the pipeline. This waste gas is currently ¬‚ared in open ¬‚ames,
which contributes signi¬cantly to climate change. The communities based their
claims on economic development grounds, but, if successful, their claims would
have signi¬cantly reduced GHG emissions from Nigeria™s fossil fuel sector.
The Chad-Cameroon and Nigeria examples suggest that the World Bank Inspec-
tion Panel could under certain circumstances raise issues relevant to climate change.

Inspection Panel Operating Procedures, supra note 15, at 519.
25

See Inspection Panel, Requests for Inspection, available at http://web.worldbank.org/inspectionpanel
26

(last visited Jan. 29, 2007).
See Inspection Panel, Summary of Inspection Panel Cases (June 30, 2006), available at http://
27

siteresources.worldbank.org/EXTINSPECTIONPANEL/Resources/Table1SummaryofInspection
PanelCases.pdf?&resourceurlname=Table1SummaryofInspectionPanelCases.pdf.
Request for Inspection, World Bank Inspection Panel Request No. RQ 02/2, para. 5 (Sept. 20, 2002).
28

World Bank Inspection Panel, Investigation Report No. 25734, paras. 87“89 (May 2, 2003).
29

Request for Inspection by Representatives of the Communities Impacted by the West African Gas
30

Pipeline in Lagos State, Nigeria, World Bank Inspection Panel Request No. RQ 06/03 (Apr. 27,
2006).
Jennifer Gleason and David B. Hunter
298


The next section will examine existing World Bank policies that could form the basis
for such claims.


2.2. Policies Relating to Climate Change
The Inspection Panel is authorized to review compliance with World Bank “opera-
tional policies and procedures.” Over the past twenty years, the Bank has adopted a set
of mandatory environmental and social Operating Procedures (OPs) and associated
Bank Procedures (BPs), which are collectively referred to as the Bank™s “safeguard”
policies. Among other things, these safeguard policies require Bank staff to assess
the environmental and social impacts of proposed projects,31 protect critical natu-
ral habitats,32 compensate people who are involuntarily resettled,33 and protect the
rights of indigenous peoples.34
The Bank™s policies do not include an explicit and comprehensive approach to
climate change, although the Bank clearly recognizes the importance of climate
change generally:

The Bank accepts the IPCC™s conclusion that emissions of greenhouse gases from
human activities are affecting the global climate. It also believes that the con-
sequences of climate change will disproportionately affect both poor people and
poor countries. The World Bank has an important role to play in helping to avert
climate change, and it will assist its clients in meeting their obligations under
the . . . UNFCCC. Under the 1997 Kyoto Protocol, some client countries with
economies in transition have obligations to reduce emissions of greenhouse gases.
Other clients “ developing nations “ have obligations to measure and monitor GHG
emissions within their countries but do not have to reduce emissions yet.35

This section explores the Bank™s environmental policies relevant to a potential claim
based on climate change.


2.2.1. Assessing Climate Impacts
The Environmental Assessment OP36 (EA Policy) is the most important of the
Bank™s environmental policies with respect to a potential climate claim.37 The EA
Policy requires that all World Bank“¬nanced projects be screened into one of three
categories depending on the extent of environmental impacts associated with the

World Bank, Operational Policy 4.01: Environmental Assessment (Jan. 1999) [hereinafter World Bank
31

OP 4.01].
World Bank, Operational Policy 4.04: Natural Habitats (June 2001).
32

World Bank, Operational Policy 4.12: Involuntary Resettlement (Dec. 2001).
33

World Bank, Operational Policy 4.10: Indigenous Peoples (July 2005).
34

World Bank, Pollution Prevention and Abatement Handbook 36“37 (1998) (hereinafter Pol-
35

lution Handbook).
World Bank OP 4.01, supra note 31.
36

Other OPs and BPs could be used in a climate claim but are not analyzed in depth here.
37
Bringing Climate Change Claims to the Accountability Mechanisms 299


project.38 “Category A” projects, which have “signi¬cant adverse environmental
impacts that are sensitive, diverse, or unprecedented” must undergo a full environ-
mental assessment with opportunities for consultation by project-affected people.39
“Category B” projects are those with adverse impacts that are “less adverse,” includ-
ing impacts that are typically site speci¬c, reversible, and capable of being mitigated.
The scope of environmental assessment for a Category B project is narrower than that
of Category A.40 “Category C” projects normally do not require any environmental
analysis because the project is “likely to have minimal or no adverse environmental
impacts.”41 In general, about 10 percent of World Bank projects are classi¬ed as
Category A, and signi¬cantly more (57 percent in 2005) are classi¬ed as Category B.
Several provisions of the EA Policy could apply to a climate claim. Some sections
speci¬cally mention a project™s climate impacts, while others refer more generally to
impacts on biodiversity or natural resources, require projects to be environmentally
sound,42 or require compliance with international commitments or domestic law.43
These provisions could be used to support a petition about the climatic impacts of
a project.
Any proposed project that contributes signi¬cantly to climate change could
arguably be classi¬ed as Category A, thus requiring a full environmental assessment
and consultation. The Bank™s EA policy states, “[A] proposed project is classi¬ed as
Category A if it is likely to have signi¬cant adverse environmental impacts that are
sensitive, diverse, or unprecedented. These impacts may affect an area broader than
the sites or facilities subject to physical works. . . . ”44 For projects that are likely to
have signi¬cant regional effects, including presumably those from climate change,
the Bank may require a regional environmental assessment with “particular attention
to potential cumulative impacts of multiple activities.”45
Assuming that an EA is required, the EA Policy speci¬cally requires environmen-
tal assessments to address the climate impact of a project. The policy states that
the assessment must take “into account . . . transboundary and global environmental


A fourth category (FI) covers “investment of Bank funds through a ¬nancial intermediary, in subpro-
38

jects that may result in adverse environmental impacts.” World Bank OP 4.01(8)(d).
World Bank OP 4.01, supra note 31, at para. (8)(a).
39

Id. at para. (8)(b).
40

Id. at para. (8)(c).
41

Id. at para. (1).
42

The project™s EA must take into account the project country™s “national legislation . . . and obligations
43

of the country, pertaining to project activities, under relevant international environmental treaties
and agreements. The Bank does not ¬nance project activities that would contravene such country
obligations, as identi¬ed during the EA.” OP 4.01(3). See also World Bank Operating Procedure
4.00: Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues
in Bank-Supported Projects (Mar. 2005) (requiring compliance with domestic law); World Bank
Operating Procedure 8.60: Development Policy Lending (Aug. 2004), section 2 (noting that meeting
international commitments is a purpose of policy and institutional lending) World Bank OP 8.60,
section 2, also requires projects to meet international commitments.
World Bank OP 4.01, supra note 31, at para. 8.
44

World Bank OP 4.01, supra note 31, at para. 1(7) Annex A, § 6.
45
Jennifer Gleason and David B. Hunter
300


aspects,” which speci¬cally include climate change.46 An assessment must evaluate
adverse impacts on different components of the environment, including biodiversity
and ecosystem services, and with respect to certain social issues, including indige-
nous peoples, resettlement, or cultural property.47 The Bank requires that borrowers
evaluate the impact of future climate change on the project itself as well. Thus, for
example, “projected sea level rise and increased coastal ¬‚ooding should be consid-
ered when evaluating the design of a coastal drainage and wastewater system.”48
The World Bank™s environmental assessment policy is mirrored by policies at many
of the other MDBs. These assessment policies also provide the framework for other
potential claims, including the need to address alternatives, discussed subsequently.


2.2.2. Evaluating Alternatives
The EA process may be used to push for alternatives or mitigation measures that
can reduce the project™s climate impact. The Bank™s EA Policy is intended to ensure
that project sponsors consider measures that have fewer environmental impacts. In
this regard, the Bank is supposed to favor “preventive measures over mitigatory or
compensatory measures, whenever feasible.”49
The Environmental Assessment Sourcebook (Sourcebook), referred to in the
introductory note to the EA Policy, clari¬es the alternatives requirement in the
context of climate change:

[O]ptions to reduce a project™s contribution to global change without adversely
affecting the cost or success of the project should be evaluated. For example,
expansion of domestic coal mining operations is likely to result in methane emis-
sions. Collection of the coalbed methane and use as an energy source would not
only reduce the contribution to climate warming, but might also be economic. . . .
When evaluating various alternative projects, not only should potential total gas
emissions be considered, but also the particular gases that are released since not
all the gases are equally ef¬cient in terms of their greenhouse and ozone depletion
capacity. For example, even though natural gas emits approximately 30 percent less
CO2 per unit of energy produced than oil (and over 40 percent less than coal),
the production and distribution of natural gas often results in the release of CH4,
which radiatively is a much more effective greenhouse gas than CO2 (over 20 times
more effective, kilogram-for-kilogram, over a 100-year period). Therefore, when
considering switching from oil to natural gas in order to reduce CO2 emissions, the
increased potential for CH4 emissions must also be considered.50

World Bank OP 4.01, supra note 31, at para. 3 & n. 4.
46

The Natural Habitats OP also addresses the impact of a project on biodiversity. It states, “[t]he Bank
47

does not support projects that, in the Bank™s opinion, involve the signi¬cant conversion or degradation
of critical natural habitats.” Natural Habitats OP 4.04, supra note 32, at para. 4 (footnote omitted); see
also Indigenous Peoples Policy, supra note 34; Resettlement Policy, supra note 33.
The World Bank, Environmental Assessment Sourcebook, Chapter 2 at § 28 (1999) (published online
48

at http://www.siteresources.worldbank.org) [hereinafter Environmental Assessment Sourcebook].
World Bank OP 4.01, supra note 31, at para. 2.
49

Environmental Assessment Sourcebook, supra note 48, at chap. 2, §§ 26“27 (citation omitted).
50
Bringing Climate Change Claims to the Accountability Mechanisms 301


In practice, only a few projects have included some assessment of a proposed
project™s impact on the global climate. Many of these include little more than passing
mention of climate impacts and none appear to take seriously the requirement to
evaluate alternative approaches in light of climate impacts. For example, the EA
for the Power Sector Generation & Reconstruction Project for Albania51 estimates
the likely emissions of carbon dioxide from the proposed facility and estimates that
those emissions would represent 0.05 percent of the total carbon dioxide emissions
for Albania. The EA notes that Albania had not rati¬ed the Kyoto Protocol at the
time the EA was prepared. Similarly, the EA for the WAGP52 provides information
about the project™s climate impacts, including some information in the Executive
Summary. Interestingly, the EA concludes (with relatively little analysis) that the
project will reduce GHG emissions because it will induce “a switch to gas fuel
from other fossil fuels (primarily light crude oil) among end-user customers.”53 For
the most part, however, World Bank project proponents have not systematically or
comprehensively evaluated their climate impacts.


2.2.3. Achieving Minimum Emissions Levels
Potential claimants may be able to raise questions about whether proposed projects
meet certain minimum standards or whether alternatives should have been selected.
Under the EA Policy, Bank-sponsored projects are normally supposed to comply with
the pollution prevention and abatement measures and emissions levels found in
the Bank™s Pollution Prevention and Abatement Handbook (Pollution Handbook).54
Taking into account borrower country legislation and local conditions, however, the
EA may recommend alternative emission levels and pollution prevention and abate-
ment measures, but only after providing “full and detailed justi¬cation for the levels
and approaches chosen.”55
The Pollution Handbook includes several provisions relevant to a future climate-
based claim. For example, the Pollution Handbook states, “The World Bank Group
will not invest in a country™s energy sector unless that country shows a commit-
ment to improving ef¬ciency, whether by restructuring the sector or reforming its
policies.”56 A borrower arguably must demonstrate a commitment to improving


World Bank project number P077526.
51

World Bank project number P082502.
52

Environmental Assessment for the West Africa Gas Pipeline, Executive Summary at 3.
53

Pollution Handbook, supra note 35.
54

World Bank OP 4.01 (6). The Inspection Panel only has authority to review compliance with Bank
55

“operational policies and procedures,” which speci¬cally do not include “Guidelines and Best Prac-
tices and similar documents or statements.” See IBRD™s and IDA™s Resolutions No. 93“10 and No. IDA
93“6, Art. 12 (Sept. 22, 1993). Although the Panel may not have authority to evaluate compliance with
the Pollution Handbook directly, the Panel cannot evaluate compliance with the EA Policy without
ensuring that the project sponsor is either complying with the handbook or has adequately justi¬ed
any deviation from the handbook™s emission levels or pollution prevention and abatement measures.
Id. at 33.
56
Jennifer Gleason and David B. Hunter
302


energy ef¬ciency before the Bank ¬nances an energy sector project.57 The Pollu-
tion Handbook includes sector-speci¬c emissions standards for several sectors that
have substantial implications for climate change, including coal-¬red power plants
and cement manufacturing.58 Moreover, the Pollution Handbook is currently being
revised and the applicable standards for climate-relevant sectors are likely to get
stricter over time. Projects in these sectors with high greenhouse gas emissions are
likely candidates for an Inspection Panel claim.


2.2.4. Consistency with the UNFCCC and Kyoto
A potential claimant may try to tie a speci¬c project to the international obligations
of the borrower country under the UNFCCC or the Kyoto Protocol. The Bank is
not supposed to ¬nance projects that are inconsistent with the borrowing country™s
international obligations. In an operational statement that set out the principles
for the Bank™s operational policies, the Bank committed not to “¬nance projects
that contravene any international environmental agreement to which the member
country concerned is a party.”59 The Pollution Handbook addresses this issue as well.
It states:

In the case of the UNFCCC and the Kyoto Protocol, the World Bank will ensure
that its activities are consistent with these conventions and will actively support its
member countries in building capacity and undertaking investments for their imple-
mentation. Global environmental externalities can be recognized at the project
level and, increasingly, in economic and sector work and in national environmen-
tal action plans. Where appropriate, country assistance strategies also include global
environmental issues. . . . 60

Most developing countries do not yet have speci¬c obligations (other than report-
ing obligations under the UNFCCC or Kyoto Protocol), but this could change in
future negotiations. More generally, the lack of policy coherence between the goals
of the international climate regime and the World Bank™s lending activities could
provide the general policy background for a successful Inspection Panel claim.

Note that the Pollution Handbook also states, “Studies by the World Bank point out the insuf¬ciency
57

of energy ef¬ciency measures alone. . . .” Pollution Handbook, supra note 35, at 173.
Pollution Handbook, supra note 35, at 275 (cement) and 413 (new thermal power plants).
58

World Bank, Operational Manual Statement 2.36: Environmental Aspects of Bank Work (1984).
59

Pollution Handbook, supra note 35, at 170. Note, however, that the Handbook continues: “It is univer-
60

sally recognized that the energy needs of developing countries are enormous, that increased energy
consumption and economic growth will be essential if the living standards are to be raised, that with-
out accelerated development in many countries domestic environmental degradation will worsen,
and that the current threat from anthropogenic climate change is caused much more by af¬‚uent
countries than by the poorer nations. For all these reasons, the Convention and the Protocol make
it clear that continued growth of energy and use of fossil fuels in developing countries is consistent
with the stipulations of the Convention and the Protocol. But guidance from the parties as to when
and how such growth must be moderated in order to maintain this consistency will only evolve over
time.” Id.
Bringing Climate Change Claims to the Accountability Mechanisms 303


2.2.5. Other Potential Policy Violations
In addition to the core issues of environmental assessment, other potential policy
concerns may arise in the context of projects affecting climate change. Consultation
and access to information, for example, are particularly important to affected peoples.
The EA Policy requires consultation with affected groups at least twice during project
preparation as well as throughout project implementation.61 In practice, many of
the Bank-sponsored consultation processes are ¬‚awed and consultation failures have
formed the basis of many claims to the Inspection Panel. Climate-related impacts on
indigenous peoples that involve involuntary resettlement or that could potentially
harm cultural property or biodiversity might violate related Bank policies.

2.3. Conclusions Regarding Inspection Panel Claims
Given its preeminent role in ¬nancing and shaping the development paths of its
developing country clients, the World Bank will be a critical player in shaping
the world™s response to climate change. The Inspection Panel offers a signi¬cant
opportunity for climate advocates to raise the pro¬le of climate-related issues at the
World Bank. Climate-based claims can be addressed by the Panel, at least if they
are brought by project-affected communities and linked to violations of the Bank™s
policies. As discussed further in the conclusion, for Panel claims to be successful
in in¬‚uencing Bank policy or mitigating climate impacts from speci¬c projects,
claimants will need to complement any Panel-based strategy with media outreach
and direct lobbying of the Bank™s top management and Executive Directors.

3. THE IFC/MIGA COMPLIANCE ADVISOR AND OMBUDSMAN

The IFC and MIGA are the private sector arms of the World Bank Group.62 The IFC
provides loans to private companies conducting projects in developing countries,
and MIGA provides guarantees against civil war, government expropriation, or other
political risks. Both IFC lending and MIGA risk guarantees can be critical for
leveraging additional private sector capital in developing country projects. The
IFC and MIGA are separate, independent organizations within the World Bank
Group. Each has its own articles of agreement and bylaws, but they share almost
identical Boards of Executive Directors. The president of the World Bank is the top
management of¬cial for IFC and MIGA as well.
IFC and MIGA are the fastest-growing parts of the World Bank Group and both
regularly support environmentally controversial projects.63 IFC and MIGA support

World Bank OP 4.01, supra note 31, at para. 14.
61

The IFC makes loans and equity investments in private-sector projects. The MIGA provides insurance
62

against political risks faced by private sector investments in developing countries (i.e., risks from civil
unrest or war).
See, e.g., Pangue Audit Team, Pangue Hydroelectric Project (Chile): An Independent Review of the
63

International Finance Corporation™s Compliance with Applicable World Bank Group Environmental
Jennifer Gleason and David B. Hunter
304


for the fossil fuel industry has also grown in recent years with, for example, high-
pro¬le support to the Baku-Tbilisi-Ceyhan and Chad-Cameroon pipeline projects.
As their role increases, so too does the need to ensure that their policies re¬‚ect climate
concerns. The IFC and MIGA have developed environmental and social policies in
recent years, but neither institution is covered by the World Bank Inspection Panel.
Instead, in 1999, then World Bank President James Wolfensohn established a new
of¬ce of the Compliance Advisor and Ombudsman (CAO) to address environmen-
tal and social issues related to IFC- and MIGA-supported projects. The following
sections address the CAO and the relevant environmental and social policies of IFC
and MIGA.


3.1. Introducing the CAO
The CAO provides people affected by IFC or MIGA projects an opportunity to seek
relief, either through dispute resolution or through a compliance review. Unlike the
Inspection Panel (which reports directly to the Board of Directors), the CAO reports
directly to the Bank President. As set forth in its operational guidelines, the CAO
has three distinct roles:

[1] Responding to complaints by persons who are affected by projects and attempt-
ing to resolve the issues raised using a ¬‚exible, problem solving approach (the
Ombudsman role);
[2] Providing a source of independent advice to the President and the management
of IFC and MIGA. The CAO will provide advice both in relation to particular
projects and in relation to broader environmental and social policies, guidelines,
procedures, resources and systems (the Advisory role); and
[3] Overseeing audits of IFC™s and MIGA™s social and environmental performance,
both overall and in relation to sensitive projects, to ensure compliance with policies,
guidelines, procedures, and systems (the Compliance role).64

At least until recently, the CAO has considered its ombudsman function to be its
primary and most important responsibility. The ombudsman function attempts to
use a “¬‚exible, problem-solving approach”65 to resolve the issues raised by affected
people. According to the CAO Guidelines, the “aim is to identify problems, recom-
mend practical remedial action and address systemic issues that have contributed
to the problems, rather than to ¬nd fault.” The CAO thus enjoys a proactive and
¬‚exible mandate aimed primarily at solving problems.

and Social Requirements (World Bank, 1997). For a summary of the project and its role in the devel-
opment of IFC™s environmental policies, see David Hunter, Cristian Opaso & Marcos Orellana, The
Biobio™s Legacy: Institutional Reforms and Unful¬lled Promises at the International Finance Corpora-
tion, in Demanding Accountability: Civil Society Claims and the World Bank inspection
Panel (Dana Clark, Jonathan Fox & Kay Treakle eds., 2003).
Compliance Advisor and Ombudsman, Operational Guidelines, at 7 (Apr. 2000).
64

Id.
65
Bringing Climate Change Claims to the Accountability Mechanisms 305


3.2. Filing a Petition
Any party affected or likely to be affected by the social or environmental impacts
of an IFC or MIGA project may make a complaint to the ombudsman. Represen-
tatives of an affected party may also ¬le a complaint, with appropriate proof of the
representation. Complaints must be in writing and must relate to the planning,
implementation, or impact of an IFC or MIGA project. The CAO will reject com-
plaints that are “malicious, trivial or which have been generated to gain competitive
advantage.”66
Once the CAO accepts a complaint, the CAO immediately noti¬es the com-
plainant, registers the complaint, informs the project sponsor, and requests relevant
information from the appropriate IFC or MIGA personnel. Management has twenty
working days to respond to the request for information. The CAO then undertakes
a preliminary assessment to determine how it proposes to handle the complaint,
culminating in a speci¬c proposal to the claimant of how the CAO proposes to
address their complaint.
The CAO™s proposal may include anything from convening informal consulta-
tions with IFC, MIGA, or the project sponsor, to organizing a more formal media-
tion process. Overall, the ombudsman™s of¬ce seeks to take a proactive and ¬‚exible
approach where the “aim is to identify problems, recommend practical remedial
action and address systemic issues that have contributed to the problems, rather
than to ¬nd fault.”67
For cases that raise issues of compliance with IFC or MIGA policies, the CAO
will typically include a compliance audit as one potential way forward. Moreover,
under the CAO™s new proposed rules, if any party (including the claimant) does not
wish to continue the problem-solving activities recommended by the ombudsman™s
of¬ce, then the CAO automatically transfers the complaint to the compliance side
for a formal compliance audit based on any allegations of noncompliance in the
complaint. In carrying out a compliance audit, the CAO has broad investigatory
powers, including authority to review IFC or MIGA ¬les; meet with the affected
people, IFC or MIGA staff, project sponsors, and host country government of¬cials;
conduct project site visits; hold public meetings in the project area; request written
submissions from any source; and engage expert consultants to research or address
speci¬c issues.68
As of 2006, the CAO had received more than ¬fty-¬ve claims, twenty of which
are related to one project: the Baku-Tbilisi-Ceyhan pipeline.69 Some of these claims
have resulted in long and complex involvement by the CAO, for example complaints
relating to the Newmont Corporation™s Yanacocha gold mine in Peru, and others

Id. at 17.
66

Id. at 13.
67

Id. at 22“23.
68

Retrospective Analysis of CAO Interventions, Trends, Outcomes and Effectiveness 2006 (summary)
69

available at http://www.cao-ombudsman.org/html-english/aboutretrospectiveanalysis.htm.
Jennifer Gleason and David B. Hunter
306


have involved relatively limited interventions, for example a case involving one
family™s inadequate compensation for land lost to the construction of Chile™s Pangue
Dam. No claim to the CAO has involved climate change, but in a recent challenge to
two pulp mills on the border of Uruguay and Argentina, the CAO concluded that the
IFC had been de¬cient in its due diligence with respect to cumulative emissions.70
Although disputed (and largely ignored by IFC management), representatives of
the local community used the CAO ¬ndings to raise concerns with other potential
¬nanciers of the project, and ultimately one of the two projects was withdrawn.71
The case illustrates both that the CAO may be used to evaluate issues involving
cumulative emissions of greenhouse gases and that the CAO ¬ndings may be useful
for raising climate-related concerns in other fora.


3.3. IFC Policies Related to Climate Change
In 2006, IFC completely revamped its environmental and social policies, departing
substantially from the World Bank™s operational policies described previously. The
new IFC policy framework includes a “Policy on Social and Environmental Sustain-
ability” that applies to IFC™s review and environmental evaluation of a project as a
lender and eight “Performance Standards” that apply to the private-sector borrowers
who are primarily responsible for implementing the project.


3.3.1. Assessing Climate Impacts
Under the new Performance Standards, all borrowers must “establish and maintain
a Social and Environmental Management System appropriate to the nature and
scale of the project and commensurate with the level of social and environmental
risks and impacts.”72 Among other requirements, the Management System must
include a social and environmental assessment that considers “all relevant social and
environmental risks and impacts of the project,”73 including global climate impacts.
The Standards require the risks and impacts to be “analyzed in the context of
the project™s area of in¬‚uence,”74 which apparently includes the project™s climate

Compliance Advisor/Ombudsman, CAO Audit of IFC™s and MIGA™s Due Diligence for Two Pulp
70

Mills in Uruguay: Final Report, § 6.1 (Feb. 22, 2006).
For a complete description of the legal and other steps taken in opposition to the pulp mills, see the
71

website of Argentina™s Center for Human Rights and the Environment, available at http://www.cedha.
org.ar/en/initiatives/paper_pulp_mills/.
International Finance Corporation, Performance Standards on Social and Environmental Sustainabil-
72

ity, Performance Standard No. 1: Social and Environmental Management and Assessment Systems,
§ 3 (Apr. 30, 2006) [hereinafter Performance Standard No. 1].
Id. at § 4.
73

Id. at § 5. While many projects may only impact the speci¬c project site, other projects will
74

have a much broader area of in¬‚uence. According to the Standard, the area of in¬‚uence should
include “areas potentially impacted by cumulative impacts from further planned development of the
project . . . and . . . areas potentially affected by impacts from unplanned but predictable developments
caused by the project that may occur later or at a different location.” Impacts associated with supply
chains must also be analyzed under certain speci¬c circumstances. Id. at § 6.
Bringing Climate Change Claims to the Accountability Mechanisms 307


impacts. The Standards explicitly state that the assessment will “consider potential
transboundary effects . . . as well as global impacts, such as the emission of green-
house gasses.”75 The IFC recognizes that:

While individual project impacts on climate change, ozone layer, biodiversity or
similar environmental issues may not be signi¬cant, when taken together with
impacts created by other human activities, they can become nationally, regionally
or globally signi¬cant. When a project has the potential for large scale impacts
that can contribute toward adverse global environmental impacts, the Assessment
should consider these impacts.76

In addition to impacts from direct emissions, the IFC appears to require project
sponsors to assess the indirect impacts on climate such as the emissions resulting
at other locations associated with electricity consumed by the borrower. Moreover,
borrowers must also assess signi¬cant impacts on ecosystem services, including
carbon sequestration and other functions that may in¬‚uence climate.77


3.3.2. Evaluating Alternatives
Under Performance Standard 3, the IFC requires the borrower to

evaluate technically and ¬nancially feasible and cost-effective options to reduce
or offset project-related GHG emissions during the design and operation of the
project. These options may include, but are not limited to, carbon ¬nancing,
energy ef¬ciency improvement, the use of renewable energy sources, alterations
of project design, emissions offsets, and the adoption of other mitigation measures
such as the reduction of fugitive emissions and the reduction of gas ¬‚aring.78

The requirement to assess alternatives is a core component of the IFC™s environmen-
tal assessment system,79 and the explicit reference to such a broad range of options
with respect to climate change will likely be critical for future climate claims.


3.3.3. Requirements to Mitigate Climate Impacts
In most projects with environmental impacts, the borrower is required to prepare and
implement an action plan to ensure that the project meets the Performance Stan-
dards over time. Under the Performance Standards, the borrower must take actions

Id. at § 6.
75

International Finance Corporation, Guidance Note 1: Environmental and Social Management Sys-
76

tems, at para. 19 (Apr. 30, 2006).
International Finance Corporation, Guidance Note 6: Biodiversity Conservation and Sustainable
77

Natural Resource Management, at para. G4 (Apr. 30, 2006).
International Finance Corporation, Performance Standards on Social & Environmental Sustain-
78

ability, Performance Standard 3: Pollution Prevention and Abatement, at para. 11 (April 30, 2006)
[hereinafter Performance Standard 3].
Performance Standard 1, supra note 72, at para. 9.
79
Jennifer Gleason and David B. Hunter
308


to mitigate any environmental and social impacts. Such actions should “favor the
avoidance and prevention of impacts over minimization, mitigation, or compen-
sation, wherever technically and ¬nancially feasible.”80 Where risks and impacts
cannot be avoided or prevented, the projects must nonetheless take measures to
ensure compliance with applicable laws and regulations, and meet the require-
ments of the Performance Standards.81 Thus, all borrowers are arguably required to
identify their project™s impact on climate and take steps to minimize such impacts.
More speci¬cally, Performance Standard 3 on Pollution Prevention and Abate-
ment requires clients to “promote the reduction of project-related greenhouse gas
emissions in a manner appropriate to the nature and scale of project operations
and impacts.”82 Borrowers are also supposed to apply “good international industry
practice” in preventing and controlling pollution. This is de¬ned in part by refer-
ence to the IFC™s Environmental, Health and Safety (EHS Guidelines), the IFC
analogue to the World Bank Pollution Handbook discussed earlier.83 The standards
found in the EHS Guidelines contain the “performance levels and measures that are
normally acceptable.”84 Different sectors may also be subject to speci¬c additional
requirements. For example, clients in the oil and gas sector must reduce ¬‚aring and
venting of gas associated with the extraction of crude oil.85 Any proposed deviation
from these standards must be justi¬ed and explained in light of their anticipated
environmental and human health impacts.86 Taken collectively, these Standards
should allow potential claimants to use IFC™s policies to push for more ef¬cient and
climate-friendly technologies.


3.3.4. Measuring and Monitoring GHG Emissions
For projects that emit signi¬cant levels of GHGs, the borrower is required to
“quantify direct emissions from the facilities owned or controlled within the phys-
ical project boundary and indirect emissions associated with the off-site produc-
tion of power used by the project. Quanti¬cation and monitoring of GHG emis-
sions will be conducted annually in accordance with internationally recognized
methodologies.”87 The IFC de¬nes “signi¬cant” to be more than 100,000 tons of
CO2 equivalent per year for aggregate emissions from direct sources and indirect
sources associated with electricity consumption.88


Performance Standard 1, supra note 72, at para. 14.
80

Performance Standard 1, supra note 72, at paras. 13“14.
81

Performance Standard 3, supra note 78, at para. 10.
82

See text accompanying note 54.
83

Performance Standard 3, supra note 78, para. 8.
84

International Finance Corporation, Guidance Note 3: Pollution Prevention and Abatement, para.
85

G.33 (Apr. 30, 2006).
Id. at para. G.24.
86

Performance Standard 3, supra note 78, at para. 10.
87

Id.
88
Bringing Climate Change Claims to the Accountability Mechanisms 309


3.3.5. Compliance with the UNFCCC and Kyoto Protocol
IFC requires the borrower to “comply with applicable national laws, including
those laws implementing host country obligations under international law.”89 Such
laws and regulations must also be considered as part of the assessment process.90
This Standard could be used to raise issues related to a country™s domestic and
international obligations to measure, report, or reduce greenhouse gas emissions
over time. As discussed with respect to the World Bank, most countries eligi-
ble for IFC-¬nanced projects do not yet have international obligations to reduce
their greenhouse gas emissions, but some may accept such commitments as part of
future climate negotiations. Such future commitments could form the basis of CAO
petitions.


3.3.6. Other Requirements
Other IFC Performance Standards also might be important for climate-related
claims. As in the World Bank context, issues regarding consultation and access
to information are frequently the subject of claims by affected peoples.91 Moreover,
climate-related impacts on indigenous peoples, involuntary resettlement, cultural
property, and biodiversity would potentially violate Performance Standards relating
to each of those issues.92


3.4. Conclusions Relating to IFC™s Compliance Advisor/Ombudsman
The IFC™s private-sector lending is the fastest-growing part of the World Bank, and
the IFC is the recognized standard setter for private-sector sustainable ¬nance in
developing countries. IFC™s new Performance Standards are shaping the environ-
mental approaches at both export credit agencies and private commercial banks.
As such, ensuring compliance with IFC™s environmental standards will have far-
reaching implications for major private-sector projects around the world. The CAO
provides an opportunity for local affected communities and their civil society allies
to raise not only localized, short-term project impacts but also long-term, cumu-
lative impacts relating to climate change. Although there is little experience thus
far in bringing climate-related claims, the new IFC Performance Standards for the
¬rst time explicitly require climate-related emissions to be quanti¬ed and impacts
assessed. In the future, these provisions could form the basis for project-speci¬c
claims or for raising more general concerns under the CAO™s advisory function.


International Finance Corporation, Performance Standards on Social & Environmental Sustainabil-
89

ity, Introduction, at para. 3 (Apr. 30, 2006).
Performance Standard 1, supra note 72, at para. 4.
90

See id. at paras. 19“22.
91

Id. at paras. 19 & 21“22.
92
Jennifer Gleason and David B. Hunter
310


4. MECHANISMS AT OTHER FINANCIAL INSTITUTIONS

In addition to the Inspection Panel and CAO, accountability mechanisms exist in
four other MDBs and three bilateral export credit or insurance agencies. The mech-
anisms and the dates they were created are listed in the table here, as well as whether
they are primarily compliance review mechanisms like the Inspection Panel,
dispute settlement mechanisms like the CAO™s ombudsman function, or both.


Compliance Dispute
Financial institution Mechanism name (Date) review resolution

African Development Bank Independent Review Mechanism X X
(2004)93
Asian Development Bank Accountability Mechanism X X
(1995/2003)94
X
European Bank for Independent Review
Mechanism95 (2003)
Reconstruction and
Development
InterAmerican Development Independent Investigation X
Bank Mechanism96 (1994)
Export Development Canada Compliance Of¬cer97 (2002) X X
Japan Bank of International Of¬ce of Examiners (2003) X
98

Cooperation
U.S. Overseas Private X X
Of¬ce of Accountability (2004)99
Investment Corporation
(OPIC)


African Development Bank Board of Directors, Resolution B/BD/2004/9 (June 30, 2004).
93

The Asian Development Bank adopted its original Inspection Function in 1995. In May 2003 it
94

adopted a completely revised Inspection Function that includes a Special Project Facilitator (SPF)
and a Compliance Review Panel (CRP). Review of the Inspection Function: Establishment of a New
ADB Accountability Mechanism, ADB Board Paper, May 8, 2003.
European Bank for Reconstruction and Development (EBRD), Independent Recourse Mechanism
95

(Apr. 29, 2003). The EBRD recently solicited public comments on a signi¬cantly improved mecha-
nism, which is expected to be adopted in 2002.
See Inter-American Development Bank, The IDB Independent Investigation Mechanism, Rules and
96

Procedures, para. 1.1. Washington, D.C. (2000). The IDB has drafted a considerably improved mech-
anism, but has failed to adopt it for over a year. Information on the IDB Mechanism is available at
http://www.iadb.org/cont/poli/investig/brochure.htm.
Press Release, Export Development Canada, Apr. 10, 2002, Information on the EDC compliance
97

of¬cer is available at http://www.edc.ca/corpinfo/csr/compliance_of¬cer/ index_e.htm.
Japan Bank of International Cooperation, Major Rules for Establishment of Examiner for
98

Environmental Guidelines, issued on May 1, 2003, available at http://www.jbic.go.jp/english/
environ/examiner/index.php (last visited Jan. 26, 2007).
For a description of OPIC™s Of¬ce of Accountability, see http://www.opic.gov/doingbusiness/
99

accountability/; see also Harvey A. Himberg, The New Accountability and Advisory Mechanism of
the Overseas Private Investment Corporation: The Application of International Best Practices of Inter-
national Financial Institutions in Proceedings from the Seventh International Conference
on Environmental Compliance and Enforcement, 307“16 (Durwood Zaelke et al. eds., 2005).
Bringing Climate Change Claims to the Accountability Mechanisms 311


Signi¬cant differences do exist among the mechanisms. Some of them, such as
Canada™s EDC Compliance Of¬cer, can explicitly address human rights. Others,
such as the Asian Development Bank™s Accountability Mechanism Inspection Func-
tion have the explicit authority to monitor implementation of any recommendations.
The scope of the environmental and social policies at the ¬nancial institutions also
can vary considerably, thus affecting the scope of the compliance review process of
the mechanisms.
Nonetheless, all of these mechanisms have certain critical features in common:
(1) they are designed to serve in compliance review or problem-solving roles; (2) they
can be accessed directly by project-affected people or their civil society represen-
tatives, typically with a simple letter; (3) they only can review the respective IFI™s
activities in light of its own environmental and social policies; and (4) their remedies
include public reporting and, in some cases, using the IFI™s own leverage to force
change in the project.
The experience with these mechanisms is far more limited than with the World
Bank Inspection Panel and CAO. In part, this re¬‚ects a lack of awareness about
the mechanisms, but it also re¬‚ects concerns among potential claimants that some
mechanisms may lack independence and authority to make a difference on the
ground. In fact, open questions of effectiveness remain about most of the mecha-
nisms other than the Inspection Panel, and potential claimants should recognize
that their claims will often be breaking new ground and in some cases testing the
ultimate effectiveness of the mechanisms. Moreover, all of the mechanisms lack
traditional enforcement powers (that, for example, one would ¬nd in a court). This
means, as described further next, that these claims should be integrated into a
broader advocacy effort that involves multiple strategies and approaches.


5. CONCLUSION

The IFI accountability mechanisms offer potentially useful opportunities for raising
climate-related concerns regarding projects ¬nanced by the World Bank or other
IFIs. To be sure, these mechanisms do not have the muscular remedies available to
courts. They do not have powers to compel actions by the IFIs or the project sponsors.
Theirs is mostly a power to make recommendations. The mechanisms also rarely
result in projects being enjoined, even while the investigations are under way. And
none of the mechanisms have the power to order compensation for injuries, although
at times claimants have received some payments as a result of the investigations.
On the other hand, the IFI mechanisms do offer one of the few ways local affected
people can raise their concerns at the international level. Generally speaking, about
half of the claims ¬led using IFI mechanisms result in some positive gains for the
affected communities.100 The power of the mechanisms resides mostly in their ability
to shine a public spotlight on non-compliance, to bring the IFI or the borrower to the
table for meaningful dispute resolution, or to raise project concerns to the political

See Clark et al., supra note 63.
100
Jennifer Gleason and David B. Hunter
312


level of the IFIs. Ultimate decision-making authority, however, remains with the IFI™s
top management or board of directors. Sometimes, corrective decisions are taken,
but neither the claimants nor the accountability mechanisms have any recourse if
the IFIs ignore the ¬ndings and recommendations.
To be successful in changing a speci¬c project or IFI policy more generally,
claims to the accountability mechanisms need to be part of a larger set of strategies.
Thus, the ability to run effective, multifaceted campaigns around the submissions
to the IFI accountability mechanisms is critical. Such campaigns should include
both media outreach and a coordinated political strategy aimed at lobbying the IFI™s
executive directors or top decisionmakers. In this context, the accountability mecha-
nism™s ¬ndings can validate civil society concerns and provide legitimacy for claims
brought to the political level of the IFIs. By raising the political stakes for the top
decisionmakers, such public campaigning can turn Panel recommendations into
political action or create the leverage needed to force concessions during mediation.
More speci¬cally with respect to climate change, claims brought through IFI
accountability mechanisms when part of a broader campaign could be used to
accomplish several goals. First, claims could be successful in getting particular pro-
jects to mitigate their anticipated climate impacts. The recent CAO claim regard-
ing the Uruguayan pulp mills provides an example of how the mechanism™s ¬ndings
were used in a variety of forums to stop one of the two projects. In that case, IFC™s
initial failure to assess cumulative impacts or to conduct proper due diligence over
the assessment fueled criticism of the projects.101 Climate-related claims offer an
opportunity to enlist the accountability mechanisms in a closer scrutiny of climate
impacts, which in some projects would likely result in improved project ef¬ciency,
fuel switching, or other speci¬c steps that could reduce climate impacts.
Beyond the impacts in the particular projects, climate-related claims can also
have broader implications. IFIs are leaders in setting policies for project ¬nance
in developing countries. By highlighting emissions resulting from speci¬c projects,
they can raise the awareness of the climate impacts of the IFI™s lending portfolios
within a country, regionally, or globally. Pressure at the project level has always been
the primary, if not only, way to make broader changes at the IFIs. Past project claims
have led to signi¬cant policy restructuring at the IFIs. For example, the ¬ling of the
Pangue claim to the Inspection Panel led to the ¬rst clear adoption of environmental
and social policies at the IFC.102 Similarly, ¬ndings from a Panel claim relating to
an agricultural development project in China led directly to a restructuring of the

See supra notes 72“73 and accompanying text.
101

The Pangue claim was ruled ineligible by the Inspection Panel (because it related to an IFC project),
102

but the President of the World Bank forwarded the claim to an independent review panel patterned
after the Inspection Panel. See Pangue Audit Team, Pangue Hydroelectric Project (Chile): An Inde-
pendent Review of the International Finance Corporation™s Compliance with Applicable World Bank
Group Environmental and Social Requirements (World Bank, 1997); see also David Hunter, Cristian
Opaso & Marcos Orellana, The Biobio™s Legacy: Institutional Reforms and Unful¬lled Promises at
the International Finance Corporation, in Dana Clark et al., supra note 63, at 115“43 (discussing the
impact of the panel investigation on IFC™s policies).
Bringing Climate Change Claims to the Accountability Mechanisms 313


World Bank™s approach to compliance.103 A focus on climate impacts at the project
level could lead to signi¬cant improvements in the policies and practices of the IFIs,
including stronger policies on assessing climate impacts, on evaluating and ¬nancing
mitigation steps, and on shifting their portfolios toward increased renewables, energy
ef¬ciency, and other low-carbon technologies.
These broad global policy implications have to be balanced with the expected
impacts at the local level. Because of the high-pro¬le nature of IFI-¬nanced projects
in many countries, the ¬ling of claims to an IFI mechanism can offer signi¬cant
media opportunities to press for related changes within the national and local context.
They can also bring scrutiny and negative, sometimes dangerous, pressures on the
local claimants, who will have to face any local fallout from their claim. Those hoping
to use the accountability mechanisms to raise climate change impacts must put the
needs and goals of the local claimants ¬rst. In this way, the IFI mechanisms can
serve their function as a validator for local communities who raise often unpopular
concerns over potential IFI-¬nanced projects, and, in the process, as a megaphone
for those local communities who want to draw attention to the impacts of project-
¬nance on long-term climate change.


See Dana Clark & Kay Treakle, The China Western Poverty Reduction Project, in Dana Clark et al.,
103

supra note 63, at 211, 235“36.
14

Potential Causes of Action for Climate Change Impacts
under the United Nations Fish Stocks Agreement

William C. G. Burns—



The seas “ all the seas “ cry for regulation as a veritable res communis omnium.1



INTRODUCTION

This chapter examines another potential international forum in which the threat of
climate change might be addressed, the Agreement for the Implementation of the
Provisions of the U.N. Convention on the Law of the Sea 10 Dec. 1982 Relating to the
Conservation and Management of Straddling Fish Stocks and High Migratory Fish
Stocks (“UNFSA”).2 Actions under UNFSA could be salutary for several reasons.
First, as outlined hereafter, the commercial ¬sheries sector may be profoundly and
adversely affected by climate change.3 This includes many ¬sh stocks regulated
under UNFSA: highly migratory species, which have wide geographic distribution
and undertake signi¬cant migrations,4 and straddling stocks, which occur both
within and beyond Exclusive Economic Zones (EEZs).5 Overall, “[m]igratory and
— Class of ™46 Visiting Professor, Center for Environmental Studies, Williams College, Williamstown,
Massachusetts, wburns@williams.edu, 650-281-9126.
Louis Henkin, Arctic Anti-Pollution: Does Canada Make “ or Break “ International Law? 65 Am. J.
1

Int™l L. 131, 136 (1971).
Aug. 4, 1994, U.N. Doc. A/CONF.164/37.
2

See sec. 2, infra.
3

Paci¬c Fishery Management Council, Background: Highly Migratory Species, <http://www.pcouncil.
4

org/hms/hmsback.html>, site visited on Dec. 26, 2006. Highly migratory species include many
species of tuna and tuna-like species, oceanic sharks, mackerel, sauries, pomfrets, sword¬sh, mar-
lin, and sail¬sh. S.M. Garcia, World Review of Highly Migratory Species and Straddling Stocks, UN
Food and Agriculture Organization, FAO Fisheries Technical Paper No. 337 (1994), <http://www.
fao.org/docrep/003/T3740E/T3740E00.HTM>, site visited on Dec. 26, 2006; NOAA Fisheries, Of¬ce
of Sustainable Fisheries, Highly Migratory Species, <http://www.nmfs.noaa.gov/sfa/hms/>, site visited
on Dec. 26, 2006.
Garcia, supra note 4, at 4. Overall, about 200 species have been identi¬ed as highly migratory
5

species or straddling stocks species. FAO, The State of World Highly Migratory Straddling and Other
High Seas Fishery Resources and Associated Species 2 (2006), FAO Fisheries Technical Paper No.
495, <ftp://ftp.fao.org/docrep/fao/009/a0653e/A0653E01.pdf>, site visited on Dec. 26, 2006. “Most
typically, such stocks frequent the localized edges of wide continental shelves, e.g., the “Flemish



314
Potential Causes of Action for Climate Change 315


straddling species account for roughly 20% of the total marine catch and include
some of the most economically valuable ¬sh populations.”6
Second, the United States, one of the world™s largest emitter of greenhouse
gases7 and a State with an abject record in addressing climate change, was one
of the ¬rst nations to ratify UNFSA8 and has played an active leadership role in its
implementation.9 UNFSA thus presents an excellent forum in which to engage the
United States, as well as other major greenhouse gas emitters, including the Euro-
pean Union and China, on climate issues. Finally, unlike the other international
fora where climate change actions have been pursued to date, UNFSA provides a
dispute resolution mechanism with teeth.10
A relatively brief chapter necessarily cannot discuss all of the intricate scienti¬c
and legal issues that an action of this nature would invoke; rather, it seeks to lay
a foundation for further research and discussion. In this pursuit I will (1) outline
the potential impacts of climate change on ¬sh species, with an emphasis on the
potential impacts of climate change on highly migratory ¬sh species and straddling
stocks; (2) provide an overview of UNFSA and potential actions for climate change
damages under the Agreement; and (3) brie¬‚y discuss potential barriers to such
actions.


Cap” in the northwest Atlantic, or the continental slopes . . . ” Jamison E. Colburn, Turbot Wars,
Straddling Stocks, Regime Theory, and a New U.N. Agreement, 6 J. Transnat™l L. & Pol™y 323, 327
(1997).
W.M. von Zharen, The Shrinking Sea and Expanding Sovereignty: The Fate of Fisheries, 15 Nat.
6

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